Pa. Dems resist push to privatize liquor, wine

KATHY MATHESON

Thursday

Feb 24, 2011 at 5:25 PMFeb 24, 2011 at 5:26 PM

Democratic state lawmakers resisted a push to privatize wine and liquor sales in Pennsylvania on Thursday, throwing their support behind union officials and others who contend the public monopoly ensures good jobs and responsible alcohol sales.

PHILADELPHIA (AP) — Democratic state lawmakers resisted a push to privatize wine and liquor sales in Pennsylvania on Thursday, throwing their support behind union officials and others who contend the public monopoly ensures good jobs and responsible alcohol sales.

The field hearing at the Pennsylvania Convention Center in Philadelphia included seven witnesses, only one of whom supported the Republican-backed privatization concept as a way to help close a projected multibillion-dollar budget shortfall.

Members of the House Democratic Policy Committee were unmoved by the arguments of Nate Benefield, director of policy research for the Commonwealth Foundation, who said that selling the state liquor stores will give consumers better choices, more convenience and lower prices.

Potential revenue from private licenses could range from $1.2 billion to $2.5 billion, he said, but noted those estimates were rough because no one knows how many licenses would be available.

"We will never know the true value of privatization until taking up competitive bids for licenses," Benefield said.

But about a dozen lawmakers who spoke at the hearing maintained that privatization will hurt the state financially in the long run, create more social ills — or both.

Legislators from urban areas in particular worried about a potential proliferation of nuisance liquor stores with a profit incentive to sell to minors.

"You're setting up a disaster for our neighborhoods," said Rep. Dom Costa, who represents Pittsburgh.

Pennsylvania's patchwork system for alcohol sales is an antiquated product of post-Prohibition laws. Bottles of liquor and wine are sold in about 620 state-owned stores staffed by public employees; beer is sold separately by private wholesalers and retailers.

The idea of privatization has been kicked around for decades, but past Republican governors have failed to get it passed. The state's new GOP governor, Tom Corbett, supports the idea as a way of helping to balance the budget and has said the state's dire financial condition might help Republicans, who also control the Legislature, get it passed this time.

Wendell Young IV, president of the union representing state store workers, said Pennsylvania's model ensures responsible alcohol sales, middle-class wages for about 4,000 employees and full collection of state liquor taxes. The stores are modern and offer a variety of products, he said.

"Our selection continues to grow and our prices are competitive," Young said. "Is there really a statewide problem with the current system?"

Some say the Pennsylvania Liquor Control Board, which oversees the state stores, should not be simultaneously tasked with policing and promoting alcohol consumption. Others complain about the inconvenience of buying wine and beer in different places, and the inability to get either in most grocery stores.

The committee chairman, Rep. Mike Sturla of Lancaster, noted that privatization would not improve wine and beer accessibility because those changes require separate legislative action. Yet such changes are all possible under the current system, he said.

There is no privatization bill currently pending before the Legislature. House Majority Leader Mike Turzai, R-Allegheny, is working on a proposal.

Legislation that Turzai proposed last year provided for 750 private liquor licenses, but it didn't go anywhere. Pennsylvania would be expected to have about 3,000 liquor stores under the per capita national average, Benefield said.

Benefield also argued that the license sale would not be a one-time infusion of cash because the state would continue receiving an estimated $400 million in taxes annually from the liquor sold. Private retailers would also pay corporate income and property taxes that state stores don't pay, he noted.

Democrats, though, questioned whether the state would collect the full amount of taxes due, noting some companies avoid them by incorporating in neighboring Delaware.

Other witnesses on Thursday included representatives of the Independent State Store Union, which represents state store managers; an economist at the Keystone Research Center; and state Liquor Control Board CEO Joe Conti.

Myron Waxman, executive director of the Pennsylvania Wine and Spirits Association, a group representing wholesalers, attended the hearing but declined to comment.

Afterward, Sturla said Benefield was the only privatization supporter to testify because "we don't know who the pro-privatization people are."

Sturla said he expects more supporters to emerge after specific legislation is introduced, and that he will then invite them to be part of the debate.

"We're not afraid of that," he said.

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